Can you Bank On Truist Financial’s 6.69% Dividend?

Truist Financial Corporation

According to the 2022 annual report,

Truist Financial Corporation is a purpose-driven financial services company committed to inspiring and building better lives and communities. Truist has a leading market share in many high-growth markets in the country. The Company offers a wide range of services. Headquartered in Charlotte, North Carolina, Truist is a top 10 U.S. commercial bank. Truist Bank, Truist’s largest subsidiary, was chartered in 1872 and is the oldest bank headquartered in North Carolina. Truist Bank provides a wide range of banking and trust services for clients through 2,123 offices as of December 31, 2022, and its digital platform.

Truist Financial Corporation is the result of a 2019 merger between BB&T and SunTrusts Banks (it was actually BB&T buying SunTrusts Banks but the official company stance was that was a “merger“). At the time of the merger, it was reported that the new entity would have a combined $324 billion in deposits, and adding to the $442 billion in assets would have made Truist Bank the sixth largest bank in the United States.

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Size matters in the banking industry.

With size comes a larger pool of customers from whom to draw capital from. With size comes economy of scale as it does not cost much more to extend the same digital services for instance across one million depositors or fifty million depositors. With size, revenue sources can be diversified. Prior to the merger, SunTrust Banks and BB&T each had their niche. SunTrust Banks was focused on the commercial side of the business and on larger clients while BB&T's focus had a larger chunk of its income coming from the insurance business. Together, each niche area not only becomes a smaller piece of the combined pie but as a whole, the new entity can offer a wider array of products and services, sufficient to rival the four largest banks (JPMorgan Chase, Bank of America, Wells Fargo, and Citibank). Now, Truist is able to serve both individual depositors looking for home mortgage lending and automobile lending, as well as business owners looking for payment solutions and supply chain financing.

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